Beijing may implement car taxes S’pore-style [Reuters/AsiaOne]

When I was in China, I saw a news program that analyzed China’s predicament of having 2,000 new cars on the road each day. There are 4.7 million cars there now. According to this article, there will be 7 million by 2012. Clear skies might come in even shorter supply now.

BEIJING – Drivers in China’s capital Beijing may have to pay to drive their cars in the near future, as part of measures the government will introduce to fight ever-worsening traffic gridlock in the city, local media said on Thursday.

Beijing’s policy incentives helped propel China pass the United States as the world’s biggest auto market in 2009, but the worsening air quality and traffic have now become a hazard in major Chinese cities.

By 2012, Beijing alone will have 7 million vehicles on the road, rising sharply form 4.7 million now, the National Business Daily said, citing statistics provided by the municipal transportation authorities.

The usage-based toll scheme will be part of a series of measures the municipal government may take to ease traffic congestion, the newspaper said, citing people with knowledge of the matter.

Other measures could include each Beijing resident being allowed to buy only one car while non-Beijing residents must own an apartment and get a parking permit before they are allowed to buy a vehicle, the newspaper said.

So far, nothing has been finalised yet, but Beijing transportation authorities may release a draft rule next Monday to solicit public opinion, it said.

To help rein in congestion, the Shanghai government stepped in years ago mandating that people pay a fee of roughly 30,000 yuan (S$5,900) for each car they owned.

A total of 14.7 million vehicles have been sold in China in the first 10 months, official data showed. Vehicle sales could well exceed 17 million for the whole year, up from 13.6 million units in 2009.

Automakers in China shipped 29.3 percent more passenger cars to dealers in November, extending a rebound that began in August as people rushed to showrooms before incentives expire at the end of the year.

Demand would remain strong in December, industry observers say, bolstered in part by aggressive year-end marketing campaigns by automakers, but they predicted the market would slow sharply in 2011.

“November sales are much stronger than what we had expected. But it’s abnormal and cannot last,” said John Zeng, an analyst with J.D. Power Asia Pacific.

“People just want to take advantage of the incentive before it’s too late. That does not bode well for next year especially for the small-car segment, which has enjoyed a bull run thanks to the sales tax cut.”

Beijing unveiled tax incentives in 2009 for cars with engine sizes of 1.6 litres or smaller, a move that helped China surpass the United States as the world’s largest auto market that year.

The incentives had been scaled back since January this year to get the market prepared for a phase-out starting from 2011, industry insiders have said.

Earlier this week, a local newspaper reported that China will scrap both the tax incentives and a 3,000 yuan rebate for fuel efficient models in 2011.

A total of 1.33 million sedans, sport utility vehicles and multi-purpose vehicles were sold in November, the China Association of Automobile Manufacturers (CAAM) said on Thursday.